Buying term insurance is one of the most caring financial steps you can take. It protects your family’s future if something unexpected happens to you.

But earlier, when people checked their policy details, they noticed an extra charge — GST on term insurance. The latest update has changed that completely. Let’s understand what this means for you.

What Is Term Insurance?

Term insurance is a simple and pure life insurance plan. You pay a small amount regularly (called a premium), and in return, your insurer agrees to pay your family a fixed sum if you pass away during the policy period.

For example:
 If you buy a term plan for 30 years with a cover of ₹1 crore and pay ₹10,000 per year, your family will receive ₹1 crore if anything happens to you within those 30 years.

It’s simple, affordable, and gives your family the financial protection they need when you are not around.

What Was GST and Why Was It Charged Earlier?

GST stands for Goods and Services Tax — a single tax applied to almost all goods and services in India.
 Before September 2025, insurance premiums were also taxed under this rule.

Every time you paid your term insurance premium, you were charged 18% GST on the base premium.

Example:
 If your base premium was ₹10,000, your total payable premium became ₹11,800.

It didn’t change your benefits but simply added a government tax to your total cost.

The Big 2025 Change — GST Is Now 0%

Starting 22 September 2025, the government has made term and health insurance GST-free.

• No GST on individual term insurance
• No GST on individual health insurance
• Applies to ULIP and endowment plans as well

This means your overall premium will now drop by about 18%, making term insurance more affordable than ever before.

So, a plan that earlier cost ₹11,800 (including GST) will now cost ₹10,000 only.

What Does “Individual” Term Insurance Mean?

The exemption applies only to individual insurance policies — the ones you buy directly for yourself or your family.

However, group term insurance provided by employers or organizations will continue to attract 18% GST.

So, the benefit is mainly for personal term insurance buyers.

How This Change Helps Policy Buyers

The GST removal is a big win for customers. Here’s why it matters:

• Lower Premiums: You instantly save up to 18% on your total payment.
• Higher Affordability: More people from middle-income groups can now afford term plans.
• Increased Awareness: It encourages people to see insurance as a must-have, not an optional expense.
• Boost for the Insurance Sector: Experts believe this move could bring millions of new policyholders under insurance coverage.

According to industry reports, India’s insurance penetration is still below 5%. The government’s goal is to make basic financial protection accessible to all, and removing GST is a major step in that direction.

Will Premiums Stay the Same for Everyone?

Most insurers are expected to pass the full 18% benefit to customers.
 However, a few might make small adjustments to the base premium because they will no longer get input tax credit (ITC) for GST they pay on their internal costs (like advertising or commissions).

Even then, the net cost for policyholders will still be lower than before.

How to Check the New Premium

Use a term insurance calculator online to find your latest premium.

Enter your:

• Age
• Gender
• Annual income
• Desired cover amount
• Policy term

The tool will now show your new, GST-free premium.

Example:

• Earlier: ₹12,000 + ₹2,160 GST = ₹14,160
• Now: ₹12,000 only

That’s a direct saving of ₹2,160 each year — which adds up to more than ₹64,000 over a 30-year policy!

What About Tax Benefits?

Even though GST has been removed, you still get the same tax benefits under Section 80C of the Income Tax Act.

If you pay ₹12,000 as your annual term insurance premium, you can claim this full amount as a deduction under Section 80C, reducing your taxable income.

It’s a double benefit — you save on GST and save on tax.

Things to Remember

• GST on individual term insurance = 0% (from 22 Sept 2025)
• Group insurance = still taxed at 18%
• Premiums will drop for new and renewal policies
• Payments made before the exemption date may still include GST
• Section 80C benefits continue to apply

How This Reform Strengthens India’s Insurance System

Before GST (pre-2017), multiple taxes like service tax and cess made insurance confusing.
 Then, GST brought a single 18% rate — clear, but still costly for many.

Now, by removing GST completely for individuals, the government has taken a major financial inclusion step. It ensures that even lower-income families can afford essential protection.

Insurance companies also believe this move will improve customer trust and bring transparency in pricing. Many are already updating their premium calculators and communication materials to reflect the new 0% GST.

Final Thoughts

Term insurance is not just a policy — it’s your family’s safety net. And now, with no GST, it’s even more accessible.

Whether you are a student starting your career, a working parent, or nearing retirement, there has never been a better time to buy term insurance.

It’s simple, affordable, and offers the peace of mind that your loved ones will always be financially secure.